BRICS bank to get approval but will take years to start

Though the details regarding its exact mode of functioning and mandate may still take more time to take shape, an international bank led by emerging economies — the BRICS bank — may be set in motion on Tuesday.

The finance ministers of the BRICS countries who are meeting on Tuesday — a day ahead of the fifth summit of the association of Brazil, Russia, India, China and South Africa — will arrive at an in-principle agreement on the issue. However, it may take a few years before it becomes a reality as there are several issues to be sorted out among the partners, said an Indian government functionary who did not want to be named. “After the declaration, it will take at least one year for its documents to be ready, and some more years before it starts functioning,” the Indian functionary said.

Though the bank was originally planned to primarily fund infrastructure projects in BRICS countries, currently there are divergent views regarding its mandate and design, he said. “There are issues regarding its capital, governance and membership,” he said.

The current proposal is for the five member countries to contribute $10 billion each, totalling a corpus of $50 billion.

Unresolved issues include whether to include advanced economies too — which would enhance the bank’s ratings — among others. There are also fears about the possibility of Chinese domination and a dispute regarding where its headquarters should be.